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John Paulson's ABX Oracle Paolo Pellegrini Discusses Anemic Real Stock Returns, Blasts Federal Reserve
The man who "made billions of dollars for John Paulson shorting real estate," Paolo Pellegrini of PSQR LLC, discusses his economic outlook and investment strategies.
Long-term view:
- Stay away from US fixed income asset: he is short USTs and Agencies
- Much more demand for commodities, specifically oil: "these are the real assets you want to be in"
- US Equities: "trend growth will be much less than in the past and that affects equity valuations" - there will be less efficiency, less activity, less real growth, which will affect stock valuation. "You will have anemic real returns on stocks."
- What should the Fed be doing? "We should focus on market based way of reducing household liabilities, basically restructure mortgages one by one and whoever made the mortgages should bear the brunt of the losses" Zero Hedge agrees wholeheartedly
- "Long-term let's change the mission of the Federal Reserve: let's codify something that prevents it from running amok, like it did for the past ten years"
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Your United States Federal Reserve Bank...putting the "fun" in fundamentals for more than a century.
Centennial mark is 2013, place your bets whether it will make it till then. I bet/hope/pray no.
Or FUNny money.
"let's codify something that prevents it from running amok, like it did for the past ten years"
Yes, indeed. And the word codify is key. We need to write it into law that will be enforced by prosecutors, rather than allowing it to be policies that are set arbitrarily by some corrupted board or commission.
We need the rule of law, not the rule of boards.
We have something better: the Takings Clause of the 5th amendment.
Unfortunately, the Supreme Court has whittled it down to the point where the Gov't and its private-party appendages can, by fiat, whipe out the value of your property for the public use and there ain't shit you can do about it.
When the Gov't takes your property to build a highway, they still have to pay you something. When they decide to wipe out the value of your portfolio to save Goldman Sachs, you get nothing.
This is a gross oversimplification of Takings jurisprudence, but go read the clause in the Fifth Amendment and figure out the mental gymnastics that justify the Fed converting your property for public use.
and when you make money to retain your purchasing power...you get taxed on it...
when is a crafty lawyer going to make the case that your capital gains should be taxed net of the dollar depreciation over the same period...particularly for long term cap gains...
Article I Section 10 of the US Constitution says
"No state shall...make any Thing but gold and silver
Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the
Obligation of Contracts,"
Each appointed and elected member of Federal
government takes an oath "I do solemnly swear (or affirm) that I will faithfully execute the office...and will to the best of my ability, preserve, protect and defend the Constitution of the United States."
Yet We the people of the United States who vote have allowed Congresses, Presidents and Courts to violate
the Constitution with impunity. Now we harvest the
results, the 2016 Olympics going to Rio only the latest reality check...
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3251493
Plenty of laws in the last 10 years were ignored and unenforced. I don't know that codifying anything will fix the problems.
The only thing we need "codify" is the ELIMINATION of the Fed and go back to money as mandated by the United States Constitution. Nothing less will do do.
I don't see why this is so complicated.
http://www.usconstitution.net/xconst_A1Sec8.html
"The Congress shall have Power...
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;"
When will people learn? The problem isn't that the central bank has the wrong mission or the wrong rules or the wrong people. The problem is the central bank exists at all.
Exactly.
Amen, I was just going to post the same. the Fed does not need to be reformed, it needs to be abolished, and the US returned to sound money.
great interview.
he just killed his chance at the Fed chief job though ;)
"My boy is wicked smahhht" Ben Affleck in Good Will Hunting.
The mortgagees are going to take a hit sooner or later so let's get it over with and maybe save a few neighborhoods in the process --- need to let the bankruptcy courts cram-down loan mods for primary residences. They do it on second, third, and fourth homes as well as commercial real estate so why are primary residences different?
Is he going to do anything other than talk his book?
The U.S. is insolvent, bankrupt under any objective rational analysis. Our ad hominem debt-to-infinity money print factory notwithstanding, our hour of reckoning cometh like the dawn. It is as inevitable as the passing of time. This psychological concept we conceived in that long ago age when our reason became hoodwinked will be evaporated as quickly as one blows out a candle and there will be nothing left but blood in the streets. Hang on to that irrational folly of value media which man calls his sacred dollar as long as you wish. A fool and his money soon part.
What should the Fed be doing? "We should focus on market based way of reducing household liabilities, basically restructure mortgages one by one and whoever made the mortgages should bear the brunt of the losses" Zero Hedge agrees wholeheartedly.
Could have worked in most instances... tranches notwithstanding...
Too late at this point however... and just who would fund the 2010 candidates?
Woulda shoulda coulda...
Let me add a few more snippets of Pelligini's thoughts from todays Bloomberg article (btw, Richard Teitelbaum deserves a big hat tip for the interview):
On Banks and Risk:
On How the U.S. Central Bank Has Handled the Crisis:
On the Job that Ben Bernanke is Doing:
Again... this is a "numbers guy" who got the housing bubble dead right. Perhaps he's been reading ZH and will post someday. :)
..
Thank the evil lord Satan we only have to worry about the last ten years.
Just think what might happen if we took a detailed look at the last 96 years.
My bet is we last until 2013 and beyond!
Nothing like filthy lucre to help corrupt mens' minds.
My guess is, Obamie didn't pack enough suitcases of it to convince the Olympic Turd Committee to bring the 2016 Olympics to Gangsterland.
Probably needed a fleet of C-130's for that mission.
Evil is as Evil does.
I have been laughing my arse off for over 4 months now at the Treasury shorts and will continue to do so until December 1st.
At least go long the Yen as a pair trade.
These guys have enough loot to outlast the irrationality. They've got life-lines from all the TBTE. Good call having the name Paulson, kinda like my Harvard Investments, LLC.
The primary trend is still down.
www.zerohedge.com/forum/market-outlook-0
Can anyone tell me what the scribd link to this post is? I can't see it in my browser for some reason...